Mervyn King Will Need to Watch His Step

By Iain Martin

One can imagine Mervyn King’s embarrassment today. Before the election, George Osborne and David Cameron rated him very highly and sought his advice discreetly. Thanks to WikiLeaks, we now learn that the governor of the Bank of England then went and secretly told the U.S. ambassador in London that the Tory pair were out of their depth. Charming.

Bloomberg

Bank of England governor Mervyn King

When the Bank of England was granted its independence in 1997 by Gordon Brown, the thinking was that it was the BOE, the MPC and the governor who needed protection from marauding politicians putting them under pressure. Now it looks like it’s the other way round. In the future, elected politicians may need protection from game-playing central bankers.

King has faced recent criticism for straying into politics, some of it unfair. It would be a strange kind of Bank of England governor who didn’t when asked for his view by a prime minister or chancellor give it freely and frankly. But he may now regret speaking so candidly to a senior representative of another government.

Cameron and Osborne are big beasts, and like many of their kind don’t like criticism much. They’ll like being patronized by Mervyn King even less.

Phone calls will go backward and forward between Downing Street, the Treasury and the bank: “All taken out of context, totally understood… we all let off steam sometimes… honestly, isn’t that WikiLeaks chap just a total bounder…”

But underneath all that, neither Cameron nor Osborne will forget. King would be wise to keep quiet and watch his step in the months ahead.

Comments (3 of 3)

Considering King was one of the experts who signed a letter saying Margaret Thatcher's economic activity in the early 80s would destroy the economy as it recovered, is his opinion really all that great anyway? What would he prefer, having Brown and Balls in office getting their flunkeys to smear and undermine him?